Page 44 - BF Cover February 2019

ARTICLE

must be more vigilant while transferring large funds and plug schemes to promote the export of Indian-manufactured
loopholes in the procedures and processes. goods to earn more foreign exchange. There is a
government scheme which allows companies to import raw
In some cases, the contraband was attempted to be materials duty-free, provided they export the finished
exported on the basis of fake Shipping Bill documents goods. Companies have imported raw material without
prepared by forging a genuine Shipping Bill passed by the paying any duty for manufacturing goods, but sold it in the
Customs. The fraudsters changed the name of the consignee market locally without exporting the goods. When Customs
and container number on a genuine Shipping Bill and officials checked the export consignment and found
brought the container inside the port area on the basis of difference in the weight of the goods they found that
such forged shipping bill. company imported some of the consignments sent abroad
and abandoned them after the investigations started. It was
Another important point to consider is the trend for banks also found that overseas port authorities had blacklisted the
to outsource some work to centres where people checking said company and auctioned some of the consignments.
the documents were not familiar with the client's business
and might fail to exercise the intuition that experienced In some of the cases some firms were inter-related firms
document checkers close to the clients would have in formed with the aim to import raw material by availing
detecting fraudulent documentation. exemption from duty and then exporting cheaper quality of
goods. This was re-imported and again exported to show
Consignment Issues artificial discharge of export obligation. In these cases
Some persons even misutilize the shipments for disposal of custom were found guilty and were fined for not following
contaminated waste in the name of export -import. There due diligence in the clearance of goods. Involved companies
were unscrupulous people who believe that using shipping were collectively fined heavily including Chartered
containers is a great way to get rid of such waste which Accountant who was fined for issuing certificates confirming
would be very expensive to process in any major economy. export figures which were not genuine.
In one instance, containers were sent with contents
described in general terms as waste, but what they really In another case exporter rotated the same set of locally
contained was untreated hospital waste. The ship owner purchased goods between overseas and India to avail
was fined a substantial sum, and had to pay for the himself of various export promotion incentives, including
containers to be taken back to the port of origin to be drawback. The company was not manufacturing anything
disposed of safely there. but merely rotated the same locally purchased goods back
and forth to fraudulently avail itself of the benefits. The
Another modus operandi noticed is that the goods are company procured goods from the local market and got
stuffed under supervision of Central Excise officers and these invoiced in the name of a fictitious manufacturer.
exporter, however, the same are replaced with contraband
during their transit by the transporter between the factory The exporter exported the goods in the name of company
/ ICD to port by opening the doors of the container by X and imported by him in the name of company Y, at a very
removing the clamps / front and rear casting of the door low value. The same goods were then exported again by
latches. The same were found re-fixed after replacing the repacking the goods. Investigations revealed that the
genuine cargo with the contraband, with help of industrial foreign exchange remittance through exports was
adhesive or welding. In these cases, the foreign buyers had transferred overseas through hawala channels, which
arranged for the transportation of the said stuffed container continued as a cyclic process.
from factory / ICD to port and during investigation, the said
transporter was found absconding and not traceable. Certain cases have been detected wherein under valuations
in the export of products have been resorted to launder and
transfer money outside India and investigations revealed
Transaction Issues that misinvoicing in the products exported is one of the
In India such cases are taking places on large scale. The mediums of trade used to launder and transfer money
Centre had announced drawback and other export incentive outside India.

44 | 2019 | FEBRUARY | BANKING FINANCE